Q: How did we get here?
A: The City of Corona has worked diligently over the last decade to help contain costs and live within our means, just like most residents and businesses here in the City have had to do during the recession and its aftermath. Despite these efforts, the City still faces an issue of fiscal sustainability – in other words, our expenses are greater than our anticipated revenues in coming years. Unlike a business, the City is not able to just raise revenues by simply increasing the price we charge for a good or service. And, the City has programs and obligations to the community, like enforcing laws and protecting the public, which cannot simply be eliminated.
Q: What does Chart Our Path mean?
A: The City of Corona knows that in order to deal with the fiscal sustainability issue, the City must embark on a new path. In order to do so, the City needs ideas and input from you, the community. We are in this together, and we want to openly and transparently chart our path towards financial stability through this process which we are introducing.
Q: Why are CalPERS rates increasing?
There are many factors which are contributing to the increase in CalPERS rates:
- CalPERS increased the mortality rate in 2014. CalPERS is projecting that people will live longer, so more money is needed to contribute to pension funds for the longer life expectancies.
- CalPERS changes to their investment strategies in 2010 have resulted in declining investment earnings. The CalPERS fund, like most other funds, suffered large losses in the stock market as a result of the 2008 Great Recession. CalPERS then decided to take a safer, less risky approach to its investment strategy. This results in lower returns.
- Reduced City staffing levels results in a higher contribution rate to CalPERS. While the City reduced its staff to save money starting in 2008, this also had the effect of less employees contributing to the CalPERS retirement funds, and the City has to make up the difference.
- There have been salary increases for the City of Corona’s Public Safety staff which began in Fiscal Year 2008-2009. This increases the pension obligations for the City.
- CalPERS decreased its anticipated rate of return on investments from 7.75% to 7.5% in 2012. This reduced future year revenue projections, which meant that more money needs to come from cities like Corona to make up the difference.
Q: What are the financial documents the City provides to their stakeholders?
A: The City of Corona produces two major documents, the Comprehensive Annual Financial Report, known as the CAFR, and the Budget.
Q: What is the CAFR?
A: The CAFR is a thorough and detailed presentation of the City's financial condition, reporting on the city's activities and balances for each fiscal year.
Q: What is the CAFR composed of?
A: The CAFR is composed of three sections: the Introductory, the Financial, and the Statistical
The Introductory Section includes a Transmittal Letter from the City Manager, which give a high level summary of the financial performance of the City for the year. The organizational chart within this section will help readers to better understand the City’s structure and its function areas.
The Financial section is the largest section, and encompasses several parts, including the independent auditor’s opinion on the financial statement, and a Management's Decision and Analyst (MD&A) that highlights the key areas of the document for readers to better utilize the CAFR. Followed by the MD&A is the Basic Financial Statements which includes detailed financial statements for government-wide, and by fund. The Notes to Financial statements further explains the major items presented in the Basic Financial Statements with detailed information, such as the investment types, the make-up of receivables, the itemized debt obligations, and the pension plan.
And finally, the Statistical section includes information on financial trends, revenue capabilities, debt capabilities, demographic and economic information, and operating information.
You can also obtain Corona’s Open Budget information at http://www.opendatacorona.com.
Q: What is the City Budget and what does it entail?
A: Our Corona Municipal Code requires that the City Manager prepare and submit the Annual Budget to the City Council for approval. The budget is developed based upon: (1) Guidance and policy direction provided by the City Council through the City Manager and to his/her executive team; (2) Long-term financial planning which reviews at least 3 years of actuals with a 5 year economic and financial outlook; (3) The Citywide Strategic Plan; and (4) Federal, State and Local law and emerging issues. The City of Corona’s fiscal year begins July 1 and ends June 30.
Q: What are some parts of the City of Corona’s budget?
A: Budgets are often separated into a number of smaller sub-budgets, or funds. Budgets are also separated between operating and capital improvements. The General Fund is the City’s primary operating fund and accounts for most City programs and services which are supported by general taxing revenue and/or fees. The citywide operating budget for fiscal year 2016-17 totals $270.8 million, with $136.1 million (or 50%) in the General Fund. The Five Year Capital Improvement Program, or CIP, provides for the maintenance and improvement of the City’s infrastructure. Infrastructure includes such items as: streets, alleyways, sidewalks, sewers, storm drains, water system, street lighting, traffic signals, and City facilities. New CIP funding for fiscal year 2016-17 totals $51.1 million, with $3.6 million (7%) in the General Fund.
Q: Where do the citizens’ tax dollars go?
A: Property and Sales Taxes account for more than 60% of the City’s General Fund revenues. Property tax is applied to the net assessed property value as of January 1st of each year, as determined by the County of Riverside Assessor-Recorder’s Office. For each $1 in the base property tax, only 8 cents goes to the City’s to pay for critical services such as (but not limited to) police, fire, library services, infrastructure, parks, recreation.. Sales and use taxes are imposed on taxable retail transactions and are remitted to the State of California, which allocates the sales tax to state and local agencies. Generally, sales of tangible items in California are subject to sales tax, such as clothes, gasoline, vehicles, and most retail goods. In California, Internet sales (e.g. Amazon) are generally taxable too. For a $100 taxable transaction, $1.00 comes back to the City as sales tax revenue for pay for services noted above. The City also receives a portion of the transaction through Prop 172 funds and Measure A funds, but it’s not based directly on a percentage of the transaction. The City carefully monitors sales tax, with published economic data as well as sales tax consultant.
Q: What is CalPERS?
A: The California Public Employees' Retirement System (CalPERS) is an agency that was formed in 1932 in California that manages pension and health benefits for California public employees, retirees, and their families.
CalPERS offer a defined benefit plan where retirement benefits are based on a formula, rather than contributions and earnings to a savings plan. Retirement benefits are calculated based on a member's years of service credit, age at retirement, and final compensation (average salary for a defined period of employment).
Q: What is a Memorandum of Understanding (MOU)?
A: Meyers-Millias-Brown Act (MMBA) is the California law that mandates cities, counties and special districts to meet and confer in good faith with employee associations/unions about all matters relating to wages, hours, and other terms and conditions of employment. MMBA Section 3505.1 provides that if agreement is reached by the representatives of the public agency and a recognized employee organization a written memorandum of such understanding is jointly prepared and presented to the governing body for approval. Once the document is approved it becomes binding on both parties.
Q: What is the role and responsibility of the City Manager?
A: The City Manager is appointed by the City Council to carry out the day-to-day administrative operations. “In the simplest of terms, City Managers execute the policies established by the elected officials of the City Council. However, as stewards of our communities, their jobs are anything but simple.
City Managers implement municipal policy, supervising the day-to-day operations of all city departments and staff. They act as liaisons between the residents and the government, meeting with citizens, and local businesses alike. They attend all City Council meetings. They hire personnel, develop fiscal plans, regulate building activities, and maintain a unique understanding of how all city operations function together. Working with other City Managers they tackle cross-jurisdictional issues that effect entire regions of the state.”
A Unique Skill Set. A City manager adheres to the Code of Ethics developed by the International City/County Management Association (ICMA). More Than Government Officials: The position of City Manager is more than just a job, and the men and women who hold the position are more than just city officials. They are our neighbors, our friends, and our link to local government. Sources: California City Manager Foundation, What is a City Manager? (Accessed January 23, 2017) Source: https://www.cacitymanagers.org/what-is-a-city-manager/
National League of Cities Website, Forms of Municipal Government (Accessed January 23, 2017) http://www.nlc.org/build-skills-and-networks/resources/cities-101/city-structures/forms-of-municipal-government
Q: What is the role and responsibility of the City Council?
A: “The City Council oversees the general administration, makes policy and sets budget. City Council functions are set forth in the Local Government Act of 1989. The City council is responsible for making decision on matters affecting their municipality and community. They also delegate some decisions to committees or officers and monitor how these are exercised as well as oversee the performance of the administration and the delivery of services and programs.”